Today, half the world’s adult population — 2.5 billion people — lacks access to basic financial services and the majority of them are women. Being financially excluded means relying on cash, where a simple task like paying a bill or receiving money from a family member can be risky, costly and time consuming. This exclusion from financial services also reinforces the cycle of poverty and slows economic growth.

From Kenya to Haiti to Indonesia, mobile phones already have begun playing an important role in expanding access to financial services, including ways to send, receive and save money. At the end of 2012, an estimated 1.7 billion people in the world will have a mobile phone but not a bank account, but thanks to advances in mobile banking technology, these are no longer mutually exclusive.

Mobile banking saves women time and money. With mobile services, women no longer have to make all-day treks to and from the bank. Photo credit: USAID

Mobile technology in the hands of women can help enable entry into the financial mainstream and provide access to life-enhancing services such as savings, payments, healthcare, education, and entrepreneurship. But as research has shown, there’s a gender gap in mobile phone ownership and usage, in part because of the lack of products designed for the wants and needs of women. In order to achieve the full potential of the role mobile technology can play in women’s empowerment globally, it is critical that service providers understand what women need and design products that effectively reach this audience.

Toward that goal, the GSMA mWomen Programme and Visa Inc. have partnered with Bankable Frontier Associates (BFA) to conduct groundbreaking research in five key countries: Indonesia, Kenya, Pakistan, Papua New Guinea, and Tanzania. Building on the results of GSMA mWomen’s Striving and Surviving, which was prepared as part of Visa and GSMA’s partnership with USAID and AusAID, the BFA research will provide a deeper dive into how best to reach these women and what services and products will directly meet their needs – offering important lessons for mobile operators, financial institutions, governments, and other partners.

Consider Pakistan, where field work already is underway. In Pakistan, only 12 percent of the total population has a bank account — and those who do are primarily men. However, mobile phone penetration hovers around 70 percent, offering a unique opportunity to provide access to more formalized financial services via mobile phone. Our early field work indicates that while Pakistani women are remarkably sophisticated and adept at managing their household finances, they don’t have access to formal financial tools. Instead, they save in money boxes in their homes or via savings groups, both of which can carry significant risk. Given the increasing presence of mobile phones in the country, mobile financial services – if designed properly – can provide an accessible and convenient avenue for women to enter the financial mainstream.

To hear more about the work underway in Pakistan, please click here to view a video from one of the field researchers, the first in a series that will highlight the work being done in all five countries.

“Through this research, we aim to uncover the challenges women face in their daily and longer term financial management and to suggest ways of easing those burdens with mobile money,” says Daryl Collins, co-author of the seminal work, Portfolios of the Poor, anda director at BFA. “Poor people of both genders manage their money with a complex portfolio of financial instruments. However, the evidence suggests that women are doubly burdened, given that they are often responsible for making ends meet, yet are less empowered to make full use of the options available.”

Our hope in this effort is to help women realize the promise of mobile financial services. In order to do that, we need to learn more about women’s attitudes towards mobile services, including barriers to frequent use and whether mobile financial services offer an entry for women who previously did not value or know how to use mobile technologies.

As our research continues over the next few months, we look forward to sharing with you the voices of these women from around the world.

Aletha Ling is chief operating officer for Fundamo, a Visa company. Chris Locke is managing director of GSMA Mobile for Development Department.

Through foreign aid, the United States helps to lift millions out of poverty, creating a path to prosperity through education and training, and supporting American interests here at home. But because half of the world operates without a formal banking system, assistance often reaches farmers, employees, and families as cash-in-hand. Cash is messy. It puts people at risk of theft, enables graft, and takes time (and additional money) to transport. We can do better.

We need to find ways to help the 2.5 billion adults who manage their money primarily as cash to leapfrog into a cashless marketplace.

Afghan men listen as a representative from M-Paisa, or mobile money, describes how mobile bill pay works. Photo credit: FAIDA

To accelerate the replacement of cash with inclusive electronic payments, the US Agency for International Development (USAID) created the Better Than Cash Alliance, a group of countries and private companies all over the world committed to solving the “messy cash” problem. In keeping with this effort to accelerate the replacement of cash with inclusive electronic payments, our White House-supported Presidential Innovation Fellow (PIF) decided to focus on Afghanistan; a country dominated by a cash economy. In Afghanistan, the cost of building out a traditional banking structure is prohibitive in the largely rural, often insecure country. But almost all Afghans now have cell phones. The near-ubiquity of mobile phone coverage offers a tantalizing opportunity to connect millions of Afghans to the economy and move both public and private sector payments into efficient, transparent “cash” channels.

However, expansion of mobile money was running into two problems. One was getting critical mass adoption. Think about the early days when few had cell phones and there was no one to call. And the second problem was interoperability. Mobile money would catch on like wildfire, if only you could send or receive cash electronically no matter which mobile operator you subscribed to.

Mobile payment services were first introduced to the Afghan market in 2009 by the largest mobile network operator, Roshan, who launched a product that essentially tried to replicate Safaricom’s phenomenally successful M-Pesa mobile money transfer service in Kenya. Though operationally successful and a proven tool for reducing corruption (as demonstrated by a pilot program to pay police by mobile instead of cash that netted a 30% increase in received salary for the officers), getting more government ministries to pay their employees was proving too slow.

USAID, through an innovation fund of public-private partnerships, addressed the adoption problem; we decided to simultaneously take on the interoperability problem. Today, phone companies in Afghanistan don’t typically function cooperatively—they don’t provide “roaming” services, for example— and aren’t equipped to share user minutes across networks. The same problem will hinder the growth of the broader mobile money sector if each phone company’s mobile money service develops in a silo, and customers are unable to transact with peers and businesses using other networks. We also know that a mobile-money ecosystem can only grow if managers on the ground can effectively track and evaluate cash-flow to employees. In the United States, Federal employees are paid electronically every month, in full, and on time. We want to work with our Afghan government partners to ensure that Afghan public employees receive the same—and this will require tools to better evaluate and manage information.

Today, 100,000 Afghan teachers still receive their salaries in cash, a cumbersome process that often results in delayed and incomplete payments. That’s why we created a text-message survey tool which ministries and program officers can use to ask employees whether they have been paid correctly, and begin building a database of phone numbers as employees transition to mobile paychecks. We’ve also worked on solutions to drive broad adoption of mobile phone-based financial services. Getting paid by mobile phone is great, but if basic life necessities can only be bought with cash—then a cashless marketplace will not flourish. USAID’s on-the-ground mission in Afghanistan enables Afghans to sign up to pay their electric bills via mobile phone, vastly improving convenience for customers and beginning to improve revenue collection, a critical requirement for maintain and expanding access to the electrical grid. So far, more than 100,000 individuals have joined the program.

Many countries around the world could benefit from an enhanced mobile-money marketplace. In fact, Tanzania and Indonesia (PDF) are already working to build their own electronic payment ecosystems. There is much more work to be done. As we continue to lay a framework and accelerate progress in Afghanistan, we plan to share lessons learned with other countries and work toward a more efficient foreign aid system that is, in many ways, better than cash.

Karl Mehta is a Presidential Innovation Fellow working on Better Than Cash at USAID.

Seth Wainer is a Program Analyst at the White House Office of Science and Technology Policy.

Learn more about or apply for the Presidential Innovation Fellows program.

This is part of our FrontLines Year in Review series. This originally appeared in FrontLines September/October 2012 issue.

With a recent explosion in mobile phones, USAID engages Afghanistan’s best and brightest to grow mobile money.

Just a decade ago, Afghans had to travel to Pakistan to make international calls. The landline phone infrastructure had completely fallen into disarray during the civil war, and there were no mobile phone operators. The first American diplomats and U.N. workers to return to Kabul after the fall of the Taliban carried backpacks full of costly satellite phones for the new Afghan emergency government.

But smart, early regulatory decisions by Afghan lawmakers, based on technical assistance from USAID and other donors, engendered the rapid growth of a profitable and competitive sector, pushing down airtime prices well within reach of normal Afghans. Today, Afghanistan is awash in mobile phones, with more than 18 million active subscriptions in a country of 28 million.

This explosion of mobile users has created a network that bridges the country’s formidable urban-rural divide while transcending gaps in physical infrastructure, low literacy rates and pervasive insecurity.

The near-ubiquity of mobile phone coverage has allowed Afghanistan to join the vanguard of countries experimenting with innovative new uses for the mobile channel, using the networks to extend services and information cheaply to populations lacking access through other means. Among the most promising is mobile money—the ability to safely store and transfer “e-money” via SMS, avoiding the expense and danger associated with moving cash, while extending the reach of basic financial services from the 5 percent of the population with accounts in brick-and-mortar banks to the 65 percent of Afghans who use mobile phones.

Already, m-money trials facilitated by the U.S. Government, such as paying government salaries by mobile instead of cash, are demonstrating startling benefits: In Wardak province, police deployed in unbanked communities report “raises” of 30 percent when paid via mobile; cash payments of salaries in Afghanistan are exceedingly vulnerable to corruption. Equally promising applications to extend and repay micro loans and pay household electricity bills are beginning to roll out, delivering dramatic increases in efficiency.

As the mobile network operators increasingly focus on scaling their mobile money products and agent networks, USAID is working in partnership with the private sector to aggregate demand and provide consumer education to Afghans, most of whom are unfamiliar with or mistrustful of the formal banking system. In one novel approach, the Agency is working with the Association of Mobile Money Operators of Afghanistan to harness the creativity and energy of Afghanistan’s best and brightest to develop mobile money applications to address pressing problems faced daily by Afghans.

An Afghan Avalanche of Ideas

The overwhelming response to an app design competition this year among Afghan university students illustrated just how compelling up-and-coming young Afghans find mobile money—more than 5,000 students across the country submitted ideas, many of which focused on how mobile money on how mobile money could improve the Afghan Government’s ability to provide basic services transparently and efficiently.

Others put forward ways in which mobile money could help empower individuals by giving them tools to manage their own finances, a particular boon for women, who often rely on male relatives to conduct financial transactions on their behalf.

Such competitions can trigger a network effect, drawing students into the design process and drawing in new mobile money users—and expanding the mobile technology sector.

Afghan officials say the enthusiasm generated by the contest and subsequent avalanche of ideas bodes well for future uptake of mobile money in Afghanistan given the country’s demographics. With two-thirds of Afghans age 25 years or younger, Afghanistan is truly a land of potential early adopters…[continued]

A group of five first-year Thai engineering students won the USAID Asia Students with Solutions 2012 Mobile App Contest last week. The contest challenged Thai university students to create mobile applications (“apps”) to help solve development issues.

The winning group, Team Optimo from King Mongkut’s University of Technology Thonburi (KMUTT), received a cash award of 50,000 Thai baht (equivalent to $1,625) and tablet computers. The team designed an app called “FloodFinder” that provides real-time data on water levels by using a smart phone’s built-in capability for high-quality photos, GPS and 3G connection, to be available on the market by next April. They were inspired to create the app by the historic flooding that occurred in Thailand in 2011 “to help save people’s lives and improve the quality of life,” said Nuntipat Narkthong, of Team Optimo.

U.S. Ambassador to Thailand Kristie A. Kenney, USAID Regional Development Mission for Asia Director Michael Yates, and KMUTT Vice President Assistant Professor Bundit Thipakorn posed with the Students with Solutions 2012 winner, Team Optimo, and members of six finalist teams after the final presentations at Hitech Digital Live Studio, Digital Gateway, Siam Square. Photo credit: Jakkapong Mangmool

Team Vana, consisting of four computer engineering students from KMUTT, won the contest’s popular vote with more than 2,900 “likes” for its deforestation app called “A-Eye” on Facebook, which available on the market next year. The app is designed to capture details of illegal logging and report the information to park officials, and to provide helpful information to park tourists.

Organized by USAID Asia, the Students with Solutions 2012 Mobile App Design Contest launched in June and focused on encouraging university students to think of creative ways to address disaster resilience and response, deforestation and forest degradation, and human trafficking. Six teams were chosen from the original applicants for the final round of the contest. U.S. Ambassador to Thailand Kristie A. Kenney announced the top winning teams at the final event, based on a decision by an expert panel of judges.

“The Students with Solutions contest looks to Thailand’s brightest to develop answers to their country’s most pressing development challenges,” Kenney said at the event. “Realizing that mobile phones have transformed our lives, apps like these can provide easy ways to share information and create greater access to services.”

Read about the Students for Solutions 2012 Mobile App Design Contest from one of Thailand’s online newspapers.

The Half the Sky Movement is excited to announce the release of three mobile phone games in India and Kenya. These new games are designed to educate women and girls about essential health issues, increase awareness about gender equality, and empower them to bring about social change in these areas. Family Choices game aims to increase the perception of girls’ place in and value to families, with a focus on keeping girls in schools; 9-Minutes introduces players to the key do’s and don’ts of having a healthy pregnancy; and in Worm Attack!, players work to rid themselves and their communities of intestinal worms.

Can games on mobile devices create impact in the developing world?With support from USAID, Games for Change (G4C) set out to answer this question with a seemingly simple goal: to produce free, high-quality mobile games that reach and educate women and girls about critical social, economic, and health issues. Looking back, we couldn’t have imagined the challenges we would encounter and the many lessons that we would learn. Here are a few tips to other “game changers” out there with similar aspirations.

Children play the Half the Sky mobile games in Kenya. Photo credit: Ed Owles, Worldview

1. Involve audience and content partners to inform and iterate on design.Early on, G4C and publishing partner E-Line Media reached out to a handful of NGOs, seeking partners who would mutually benefit from the use of these games. We worked to integrate the NGOs into the development process. Each group assisted with the game conceptualization and helped define the goals of the game. NGOs were also enlisted for their content expertise – to align the game content with their existing programs.

Our NGO partners also connected us with local communities to solicit feedback on art, gameplay, language and instructional content. We strengthened relationships with each NGO and used their valuable feedback to enhance the games. One local partner was so enthusiastic about helping that we decided to name a game character after her.

2. Design with the technology platform in mind.Next we explored how to get the games into the hands of our hard-to-reach audiences. Just how does someone living in a rural village access digital technology?

Recognizing this problem from the outset, we looked to mobile technology as a gaming platform. Feature phones (J2ME) offered an opportunity to reach a much broader audience and offered media consumption to communities who might not otherwise see any other form of interactive media.

3. Penetrate the market with multiple distribution channels and consider how each will impact game use.Upon release, G4C and E-Line Media will launch the games for free on local mobile operators’ and handset providers’ app stores in India and East Africa. However, no access to mobile Internet would mean that the games would never be seen by the hardest-to-reach audiences.

To address this problem, we worked with our NGO partners to leverage existing infrastructure and distribute the games through their programs on the ground. E-Line Media developed a multi-pronged strategy, with several NGOs in both India and Kenya, to create a variety of additional channels for distribution.

ConclusionsFor everyone involved, this has been an incredible journey that has created a foundation for mobile game development and distribution that we hope to build on and bring to scale in the coming years. As mobile technologies continue to penetrate and dominate emerging markets, we will continue to shape and build the infrastructure and methodology for game design and development.

We are pleased to announce that starting today and in the following weeks, the three mobile games will be made available for free download from local app stores. They will be featured on the Nokia, Safaricom, GetJar and Appia app stores for a range of operators and devices in both Hindi and Swahili.

Mobile phone use in the developing world is exploding, yet women are at risk of being left behind. On average, GSMA research shows women to be 21 per cent less likely than men to own a mobile phone in low- to middle-income countries. The resulting mobile phone gender gap represents as many as 300 million women in the developing world who do not have access to this potentially life-enhancing tool.

Barriers to mobile phone ownership among resource-poor women include limited technical literacy and limited understanding of the full potential of mobile devices and services. The GSMA mWomen Program, as part of USAID’s mWomen Global Development Alliance, set out to address this by launching the GSMA mWomen Design Challenge: Redefining the User Experience at the third annual Social Good Summit in New York on Sunday. Through submissions from the global design and developer community, the design challenge seeks to increase access to life enhancing mobile services so that regardless of someone’s skill level, they can pick up a phone and maximize its potential.

Today, Visa joins with six partners from government, the private sector and the international development community to launch the Better Than Cash Alliance. Working together with our other founding members – the United Nations Capital Development Fund, the U.S. Agency for International Development, Citi, the Bill & Melinda Gates Foundation, the Ford Foundation, and Omidyar Network – the Alliance will help bring many of the world’s 2.5 billion unbanked people into the financial mainstream by providing them with resources that are safer and more useful than physical cash.

Around the world, governments, the development community and the private sector are making billions of dollars in cash payments to the poor – in salaries, pensions, emergency relief, social aid and more. Making these payments in physical cash or in-kind goods costs poor people time and money and can be unsafe.

To begin with, people in developing countries often have to travel great distances just to collect cash payments. That can mean days away from work and their families and, worse, the risk of being robbed on the journey back. Delivering cash to poor recipients often involves several couriers – and if any of these intermediaries pocket part of the amount, cash is impossible to track.

For anyone without a bank account, cash also is hard to save. Shifting payments to electronic or mobile payments offers more security and convenience – and, more importantly, an onramp to financial inclusion by providing easier access to accounts they could use to save, get a loan or make payments of their own.

At Visa, we are proud of the work we are doing already around the world to help governments enable the electronic delivery of social benefits and other disbursements. For example, in Mexico, Visa works with the government-owned Bank of National Savings and Financial Savings (Bansefi) to distribute social program benefits via Visa debit and prepaid cards to 6.5 million people, giving recipients opportunities to use financial services to save, budget and improve their lives.

In the Dominican Republic, Visa and the government teamed up to boost the national financial inclusion rate and address theft and delay issues of government benefits by distributing reloadable Visa Solidaridad cards. Today, more than 800,000 people in the Dominican Republic receive their aid via Visa card—which also helps provide customers for local merchants as those citizens use their cards to pay for food, fuel and medicines.

Through this innovative partnership, Visa and our partners in the Alliance aim to provide governments, the development community and the private sector with the inspiration, technical expertise and financial support to commit to making the transition to electronic payments and unleash new potential to reduce poverty and promote economic development.

Imagine if you picked up a smartphone and didn’t know how to use it. What must it be like to have such a powerful device in the palm of your hand and not be able to utilize it? For many technically illiterate women in the developing world, navigating a smartphone or even a more basic feature phone is a real challenge.

Based on research performed in Egypt, India, Papua New Guinea and Uganda, as part of the GSMA mWomen Program, we know that on average, resource-poor women are 22% less likely to want a mobile phone because they would not know how to use it. Yet we also know from other GSMA research that mobile phones afford women critical entrepreneurial opportunities, security, and a greater sense of family connection.

Mobile phone use in the developing world is exploding, yet women are at risk of being left behind, missing out on opportunities and services from education to healthcare. Making the user experience easier would open up a multitude of possibilities. So what if there was a more intuitive way of navigating your phone?

The GSMA mWomen Program, as part of USAID’s mWomen Global Development Alliance, has set out to do just that by launching the GSMA mWomen Design Challenge: Redefining the User Experience at the third annual Social Good Summit in New York. Through submissions from the global design and developer community, the Design Challenge seeks to increase access to life enhancing mobile services so that regardless of someone’s skill level, they can pick up a phone and maximize its potential.

At the Social Good Summit, USAID, GSMA, AusAID, Qtel Group and the design firm Huge, shared possible approaches to solving this issue, by making the mobile user interface and experience more intuitive. Mobile phones are a real game changer when it comes to tackling global challenges around the world but if the design does not change, hundreds of millions of women risk being left out in this next mobile revolution. That is a risk we cannot afford to take.

“We are excited to be joining our partners in announcing the Better than Cash Alliance today. Committed to moving the global community onto electronic payments in place of physical cash, the Alliance will help the world’s poorest families join the modern economy and realize the benefits of a more transparent, inclusive, cash-light world. I’m optimistic that this Alliance will help usher in a new era of opportunity for some of the most vulnerable people on earth.”

– USAID Administrator Raj Shah, September 19, 2012

As surprising as it may sound, physical cash can undercut many development objectives. From improving aid effectiveness to promoting transparency, cash gets in the way. That is why I am excited about the launch of the Better than Cash Alliance, a global public-private partnership dedicated to accelerating the use of electronic payments in place of physical cash. I am proud to have USAID stand alongside forward-thinking partners like the Bill & Melinda Gates Foundation, Citi, the Ford Foundation, Omidyar Network, Visa Inc., and the U.N Capital Development Fund to move the world toward a more transparent, efficient, inclusive, cash-light society.

This Alliance wouldn’t have been possible five or ten years ago. But with the rapid rise of new technologies in the developing world, we can now leverage growing payment systems powered by electronic cards and mobile phones to reduce the presence of cash.

With electronic payments, people can store money safely and securely, a game-changer for the 2.5 billion people around the world without access to basic financial services. With electronic payments, companies and governments alike can improve transparency in their operations. You cannot track cash or see the hands it moves through, but it is possible to track how money flows when it is transferred electronically.

With electronic payments, organizations making payments or collecting fees can save money. Paying teachers their salaries or issuing social transfers is expensive. In some of the most distant areas of the world it requires couriers to lug big bags of cash around, and leakages are inevitable. For example, a World Economic Forum says that developing country governments can realize more than a US$ 100 billion in economic benefits by 2015 by making major payment streams digital.

The benefits of electronic payments are widespread and underpin so many of our development objectives. I’m not suggesting that it will be easy to realize a cash-light world. It won’t. Over the last year, USAID has worked tirelessly to use our payments and presence as a force for good by promoting the use of safe, accessible, affordable electronic payments systems in place of physical cash.

But we know that we cannot do it by ourselves. This is a movement that should matter to all of us. It should matter to any company or NGO trying to save money or protect their employees. It should matter to any donor organization or government trying to improve the efficiency and effectiveness of development programs. It should matter to anyone who cares about the plight of the poor.

This vision will take time. But I’m excited about the steps we’ve taken and I wholeheartedly believe that we must do better than cash. We coined the term “Better Than Cash” because that’s actually what we believe – electronic payments, when introduced in a secure, equitable way, can offer enormous benefits for hundreds of millions of poor families trapped in a cash world.

To learn more about Better Than Cash Alliance, visit www.betterthancash.org, and follow @betterthan_cash. #epayments #progress.

For more about USAID Mobile Solutions efforts, visit www.usaid.gov and follow us @msolutionsUSAID.

Read the latest edition of USAID’s FrontLines to learn more about how the Agency is engaging youth around the world and how it is embracing mobile technology. Some highlights:

Looking to young minds for new ideas to old development challenges is producing fresh solutions. Just ask the young woman who is helping save newborns in Malawi with a jerry-rigged aquarium pump.

They’re opening small businesses, building environmental awareness and learning the ins and outs of politics from the village council to Parliament. Through youth-led community groups, more than 700,000 of Kenya’s young people are preparing to become their country’s next generation of savvy citizens and influential leaders.

SaysChris Locke: “The last two or three billion people in the world to access the Internet will do it via mobile phone.” Locke is the managing director of GSMA Development Fund, the development arm of the world’s largest mobile industry association. Read what else he has to say about the evolution of mobile technology in the developing world.

Before mobile banking came to rural areas of the Philippines, customers might take as long as six hours to journey to a bank branch to conduct business. Now it takes minutes and only their fingers do the traveling.

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